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Principalities are great for stamp collectors. They are less
appealing when they exist inside your company, thanks to the
manager or staffer who has built his or her own private
Luxembourg.

It's a phenomenon known in the management trade as "empire
building": an urge to create fiefdoms with pumped-up staffs and
budgets that match the inflated ego of the perpetrator--and it
can sabotage your team, bottom line and worse.

"It can kill the company," says Mark Faust, a growth and
turnaround specialist at Cincinnati-based Echelon Management
International and author of Growth or Bust! "You're
lucky if it's just reducing the potential of the company by 20 or
30 percent, but it could be a lot more. It is one of the greatest
constraining factors on U.S. business."

Empire builders don't care about that. Their goal is to increase
their personal power and stature by amassing departments,
information and head count. They measure their worth by the heft
and gleam of their domain. It's a little like the peacock
strutting his Technicolor tail for the females, says Art Markman,
a psychologist at the University of Texas at Austin who runs the
Human Dimensions of Organizations program. "In this case, it's
not a mating signal, but a power signal to the organization that
you're somebody to be reckoned with," he says.

Thirty years ago an empire builder might have been applauded for
chutzpah. But times have changed. In recent years there has been
growing scrutiny on the dangers of empire building; management
experts have come to see it as a hidden toxin at the root of many
business dysfunctions, leading to excess spending, anemic growth
and turf wars.

In today's lean landscape, there is little tolerance for rogue
hoarders and bloat. Further, leadership philosophies are evolving
from the rigid command-and-control structure to a collaborative
model. Power-hungry alphas are seen as undermining the collective
good and hindering employee engagement.

Tron Jordheim, chief marketing officer for Columbia, Mo.-based
StorageMart, sees empire building as a tendency of new,
status-seeking middle managers who want to create organizations
around them. The danger is that "you pump up expenses too high
and too soon," he says. "Payroll and administrative costs start
rising, but you don't see the revenues. Worthwhile projects get
scuttled this way."

Empire builders are skillful manipulators who build up their
holdings over time--maneuvering for a project here, adding budget
there. "It can happen to anyone," says Robert Quinn, faculty
director of the Center for Positive Organizations at the
University of Michigan's Ross School of Business. "Usually,
they're very technically competent at something, and the person
takes advantage of that. It creates friction in the organization,
but because of the power base, it's felt that no one can touch
the person."

It's "too big to fail," the personnel version. A classic case is
the IT chief, keeper of the sacred code, or a sales honcho who is
so good at what he does that no one dares challenge him. Empire
builders are not hard to find: Just follow the bottlenecks and
the bickering.

Secret agendas, diverted resources, walling off one part of the
company from another--empire building can smother performance and
destroy rapport and trust. In addition to territoriality, the
behavior breeds resentment and disengagement, fueling
interpersonal conflict and division. "Companies are human
networks," Quinn says. "Everyone suffers when there's no longer a
sense of teamwork or organization."

It's on this cultural level where the rot of empire building
really takes hold, souring relationships and creating internal
rivalries that take time and energy away from the battle against
the real competitors in the market.

"Empire building is the enemy within," says Dana Ardi, founder of
New York-based Corporate Anthropology Advisors and author of
The Fall of the Alphas. "They're not operating for the
greater good." She argues that the behavior is out of step in the
social era of collaboration and connection. "We want a
competitive spirit, but we don't want people competing against
each other. You want to be in a culture that rewards
collaborative behavior and the overarching goals of the company."

Research on human motivation over the past couple of decades has
shown that the command-and-control model of leadership is flawed.
As University of Rochester psychology professor Edward L. Deci
has detailed in Why We Do What We Do and a host of
landmark studies, monetary incentives and rigid control don't
drive employees. To get the best out of your team, you have to
allow them to participate and be more autonomous, and you have to
make sure they understand how they are contributing to the
company mission.

Empire building is the antithesis of that. "The question isn't
how much can I achieve; it's what can I contribute," says Rick
Wartzman, executive director of the Drucker Institute in
Claremont, Calif. "That's one of the hallmarks of a leader.
What's the mission of the company? Your objective should be in
line with the objective of the company."

The drive to extend domain and, thus, status has been playing out
for millennia in the sweepstakes for survival of the fittest. The
more territory and resources, the more power. Those who can
dominate gain further access to additional valuable resources.

But this competition is no longer about physical survival;
rather, it's about social and psychological survival. "Today we
fight over the survival tools of information, relationships,
status or visibility. That's what people need to succeed," says
Annette Simmons, founder of Shreveport, La.-based Group Process
Consulting and author of Territorial Games. In fact,
Simmons says, empire building is simply another term for
protecting territory. They both come from the same primitive
place in our brains, the emotional hub of the ancient limbic
system. That means empire-building stratagems like keeping an
employee from working on someone else's project so they can work
on yours fall into the reflex category. The typical empire
builder is oblivious to what he or she is doing.

Some empire builders are responding to the signals the
organization is sending as to what constitutes power in the
organization. Others are driven by contingent self-esteem, a
belief that self-worth comes from external markers such as money,
recognition, size of office/budget/staff. It's a futile game;
external approval can't make a person happy, because it's based
on what others think. Further, it's fickle, and it can put a
person on a hedonic treadmill where they can never catch up with
the next set of wants.

"If they get the corner office, now they need the suite," Markman
says. "They have five people working under them, now they need
10. That isn't going to end."

The prime mover for most empire builders, it turns out, is the
opposite of what they want to project: weakness. As with the
braggart, behind the brash behavior is anxiety and a low
self-esteem that has to be padded constantly. "If you're not
telling them how great they are, they're in an anxious state that
they're not great," Markman adds. "All of this is a way of trying
to keep the anxiety at bay. 'I must be important; I've got a huge
staff.'"

When personal worth is based on the external domain, there's a
constant fear that someone's going to take it all away. "When you
start seeing behaviors that reflect someone needing to control
everything--a lack of integrity, backstabbing, information
hoarding, empire building for the sake of empire building--it is
often a reflection of someone feeling threatened," says Nicole
Lipkin, a business psychologist in Philadelphia and author of
What Keeps Leaders Up at Night. "The real or imagined threat is
often a perceived threat to one's self-esteem or sense of self."

That sense of self needs more strokes if it is part of a
narcissistic personality, which fuels the empire-building
psychology. Unhealthy narcissists are in it for the glory and
praise; they need a steady stream of both to feel powerful.
Because their self-construct is weak, they detest criticism and
can't stand for anyone else to get credit for anything good that
happens--which makes them extremely hard to work for and sows
dissension in the ranks. They lack a crucial ingredient of
leadership: empathy. They can turn on anyone at any time, stretch
the truth, hide bad data, duplicate staff without a whiff of
concern about the effect on budget and rationalize it all as
necessary for getting the job done.

No wonder colleagues break out the champagne when these
self-obsessed roadblocks are relieved of their duties. Quinn of
the Ross School of Business recalls when an empire builder at a
company where he worked--an executive secretary who used her
access and institutional knowledge to build her fiefdom--was
fired. "Her last day, as she walked down the hallway, heads
popped out to watch her, and after she left everyone sang, 'The
wicked witch is dead.'"

It's not only power and insecurity that cause imperial behavior.
Organizations can enable it, too, by signaling that amassing
resources is the route to respect and power. Empires rise within
companies because "either the organization is not clear on what
its objectives are, or you have people who are not fit for
leadership," says the Drucker Institute's Wartzman. The solution
lies in communicating the goals of the organization clearly and
calling out offenders. Take the time to ask questions and listen
to staff for problems and conflicts. What's standing in the way
of the mission and performance?

Identify the black hole where resources and engagement are
vanishing, then confront the person responsible with the
evidence: outsized staff, perks, ballooning turf, conflict with
others. The response will usually be, "I'm just doing my job."

"The truth is the person is not doing their job," Quinn says.
"Part of the job is embracing the common good. When I'm
destroying that, I'm not doing my job. It has enormous dollar
implications. When your team breaks down, and the climate becomes
toxic, you're losing things that impact the bottom line."

The empire builder has to understand that his or her behavior is
a detriment to the company, which means bad job
performance--something that can wake up the insecure very
quickly. The key point, Wartzman says: "You need to be focused on
creating value for customers, not yourself. It's backwards."

Jordheim of StorageMart has had the empire conversation with
various managers over the years. He tries to dig out the reasons
behindthe behavior. "Do you really need this person, or are you
just having fun building out?" he asks someone who's beefing up
their staff. When he thinks the person is power-tripping, he'll
say, "You're building too much. You have to pull back."

Performance reviews are a good place to make the case that being
a leader requires the effective use of resources, not the Imelda
Marcos school of warehousing. Another approach is to show why
it's in the person's long-term interest to rein in the potentate
behavior.

Markman suggests taking a trip forward in time with the empire
builder and having the person review their life from the point of
view of their retirement years. What most people want, he says,
is "to feel like they were respected, that they moved their
organization forward, that they innovated. There are very few
people who look back on their career and say that what [they]
wanted was to have a very big office."